Novak Corporation had the following activities in 2017. 1. Sale of land $167,000 4. Purchase of equipment $378,000 2. Purchase of inventory $904,000 5. Issuance of common stock $345,000 3. Purchase of treasury stock $68,000 6. Purchase of available-for-sale debt securities $53,000 Compute the amount Novak should report as net cash provided (used) by investing activities in its 2017 statement of cash flows.

($211,000)

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.  

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.

Net cash provided (used) by investing activities

= $167,000 - $378,000

= ($211,000)

Other transactions given are to be reported in the operating and financing section of the cash flow statements.

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